CST Brands Could Be Takeover Target

SAN ANTONIO — Last year will be remembered as a year chock-full of mergers and acquisitions in the convenience store industry, including Marathon Petroleum Corp.'s purchase of Hess Corp.'s retail division, Energy Transfer Partners LP's merger with Susser Holdings Corp., and Alimentation Couche-Tard Inc.'s announced acquisition of The Pantry Inc.

Could San Antonio-based CST Brands Inc. be the first major acquisition target of 2015? Bonnie Herzog, managing director of beverage, tobacco and convenience store research at Wells Fargo Securities LLC, raised the possibility.

"We believe CST's ownership of an MLP [master limited partnership] has made it an attractive acquisition candidate," Herzog wrote Wednesday in a research note. "…Management has not commented."

Herzog is referring to CST's August purchase of 100 percent of the membership interests of Lehigh Gas GP LLC, the general partner of Lehigh Gas Partners LP, for approximately $85 million. The transaction closed Oct. 1, at which point Allentown, Pa.-based Lehigh Gas Partners changed its name to CrossAmerica Partners LP.

As CSNews Online previously reported, CST Brands CEO Kim Lubel is a "deal junkie." When spinning off from Valero Energy Corp. on May 1, 2013, CST operated 1,033 convenience stores in the United States and Canada. In just the 20 months since, the retailer has attained a coast-to-coast national network of assets consisting of more than 2,150 sites — more than 1,150 company-operated stores and another 1,000-plus dealer/wholesale sites — in 25 states and Canada.

Clearly, CST Brands, parent to Corner Store locations in the U.S., is aggressive when it comes to purchasing other retail assets. Whether or not the company itself would be open to being acquired remains a question.

In the meantime, CST Brands is operating on all cylinders, with many of its recent acquisitions — including its recent purchase of Nice N Easy Grocery Shoppes — providing accretive value to the company. "We continue to be impressed by CST's ability to create value," wrote Herzog.